Options out there for going green

OUTLOOK 2010

Thanks to some investments that have already begun paying dividends, the Allentown Brew Works has been growing greener right under everyone's noses -- or, more precisely, over everyone's heads.

The brew pub on Hamilton Street has already swapped out its old lights for energy-efficient LED bulbs, and, if all goes well, will soon begin drawing a portion of its power from a rooftop solar array.

In pursuing these cost-saving power options, the restaurant owners didn't approach a traditional bank for financing. Instead, they dealt with the Allentown-based Sustainable Energy Fund, a nonprofit agency that administers grants and offers financing for green projects that banks might consider too novel or risky, especially in a historically tight lending market.

While some major banks -- Wachovia and Bank of America, for example -- have stepped up loans for renewable energy and energy-efficiency projects in recent years, "It's a challenge to get banks to finance 100 percent," said SEF President Jennifer Hopkins, whose agency also provides educational programs on renewable energy and energy efficiency.

Even when banks are willing to finance, they don't offer the kind of perks that might help developers use green construction instead of cheaper traditional methods. According to a 2008 survey by National Real Estate Investor, a trade publication, corporations and developers had trouble finding favorable financing terms for green projects or found that financing for green offered no more perks than financing for traditional properties.

"Bankers are very conservative," Hopkins said. "But as renewable energy and energy efficiency become more mainstream, there will be more options for loans. The banks need to understand energy efficiency projects put more money into businesses and increase their ability to pay back loans. They need to value that."

Brew Works co-owner Jeff Fegley said a family friend's suggestion led him to contact a Lower Macungie Township startup company called Sitka Enterprises. Fegley had investigated LED lighting but was reluctant to try it because the versions he'd seen couldn't be dimmed and provide the same ambience as traditional lights.

Sitka, however, offered a new dimmable lighting that required one-fifth of the energy of the restaurant's incandescent system, meaning the project could pay for itself in a few years. To pursue grants and arrange financing -- not only for the LED system but the planned $300,000 solar array, which might be installed by summer's end -- Fegley contacted SEF. He obtained a $20,000 LED grant, which covered about 75 percent of the project cost.

"They understand these projects, where a normal bank will not," he said. "They understand LED, solar. They recognize the payoff. A bank might say 'What do you mean it's going to pay itself off? What if it doesn't?"

That's not to say banks are always hesitant to back green projects. Carol Kaplan, director of public relations for the American Bankers Association, said green lending is largely a niche service, with some banks promoting such programs as a way to distinguish themselves from competitors.

"There are a few banks out there that have really taken quite an interest in the whole green movement, and that includes everything from the types of investments they'll make to how much paper they'll waste," she said. In this tight lending market, "being green alone isn't a guarantee" that a bank will be amenable to lending, but it isn't a hindrance, either.

"You have to show you are credit-worthy and have a good business plan and have funds," Kaplan said. "Even if a bank is known for specializing in green lending, you can't just go in" and expect to get a loan.

While investments in renewable energy get the most attention -- solar and wind power retain a hint of novelty even now -- energy efficiency is the greater part of the green equation, Hopkins said. A business owner can install solar panels and windmills, but won't realize a penny in savings if energy is leaking out through poorly caulked windows and uninsulated attics.